An interest rate floor is often set by credit card companies for credit card interest rates that are based on a variable or adjustable rate.  The floor credit card rate is the minimum rate that the credit card APR will be reduced to should interest rates drop. Usually variable rate credit cards are based on the prime rate plus a margin.  If the prime rate drops, the credit card interest rate will drop.  The floor rate places a limit as to how low the rate charged can fall.  If rates drop dramatically bank credit cards issued with a floor rate will not drop below a predetermined level that should be codified in the credit card application and credit card agreement.

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